- The gold markets rallied quite nicely during the early part of the session on Friday as the non-farm payroll number came out much weaker than anticipated.
- This had the US dollar selling off and of course the odds of interest rate cuts spiking.
- This is a good thing for gold as you can see, and we have since broken out of the inner consolidation area that we had been in previously, but right now I don’t see that we have the momentum to break above the $3,500 level.
- So that is a barrier that I think will continue to be extraordinarily difficult to deal with.
On a Break Higher
If we were to break above $3,500, then you can take a measured move of the $300 range we have been in and expect, hopefully at least, that markets go looking to the $3,800 level.
Short-term pullbacks are possible and it’s possible also that those short-term pullbacks offer buying opportunities. The 50-day EMA is offering a certain amount of support near the $3,333 level. And with that being the case, I think we’ve got a scenario where traders are just looking at this, trying to determine whether anything matters and I suspect it doesn’t.
We are stuck in the summer range and until we get volume pushing this thing out, I just don’t really have a whole lot to do with this. I think you’ve got a situation where we are looking for some type of reason to get moving. Volume would be a great thing, we just don’t have it as we’re heading into August, I would anticipate more sideways and choppy action more than anything else, essentially doing the same thing that we have for a while now.
Ultimately, I like gold, but I also recognize that there aren’t enough traders out there to move things.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.